Jessi Livermore, the legendary trader says: “Don’t take action with a trade until the market, itself, confirms your opinion. Being a little late in a trade is insurance that your opinion is correct. In other words, don’t be an impatient trader.”
This is a common piece of advice in trading, often attributed to Jesse Livermore, the famous stock trader from the early 20th century. The idea is that rather than rushing into a trade based solely on one’s own opinion or analysis, it is better to wait for the market to confirm that opinion before taking action.
By waiting for confirmation, a trader can increase the likelihood of making a profitable trade, since the market’s movements will validate their opinion. This also helps to avoid impulsive decisions and the potential for losses due to jumping into a trade too quickly.
Waiting for confirmation in trading means that a trader waits for the market to confirm their analysis or opinion before taking action on a trade. This confirmation can come in the form of a price movement or other signals that validate the trader’s analysis.
For example, a trader may believe that a certain stock is undervalued and should rise in price. Rather than immediately buying the stock, the trader waits for the market to confirm their opinion by watching for a price increase or other bullish signals.
The benefit of waiting for confirmation is that it can increase the likelihood of making profitable trades by avoiding impulsive decisions and false starts. However, it is important to balance this approach with the need to be timely and responsive to changing market conditions. Waiting too long to act can result in missed opportunities or losses if the market suddenly moves against the trader’s position.
Ultimately, waiting for confirmation is one tool in a trader’s arsenal, and it should be used in conjunction with other analysis and risk management strategies.
Successful trading requires a combination of patience, discipline, and flexibility, as well as a deep understanding of the markets and the factors that drive their movements.